You don’t need to be rich to raise a millionaire
There's a picture many of us have of what "investing for your child" looks like. A trust fund. A family accountant. Parents who casually mention their broker at dinner parties. Money that was already there, quietly multiplying, long before you arrived.
If that picture has ever made you think that's not for people like me, this essay is for you. Because the single most powerful ingredient in building wealth for a child isn't money. It's time. And if you're the parent of a baby or a small child, you are currently holding more time than almost any investor on earth.
The quiet math of starting early
Here's the number that changed how I think about this, and I say that as an accountant who looks at numbers all day.
Twenty-five dollars a month, invested from birth in a simple index fund earning an average 8% a year, grows to roughly $15,000 by the time your child turns 20. Keep the habit going and it becomes more than $650,000 by retirement.
Twenty-five dollars. That's a few coffees a week. A subscription you forgot to cancel. It's an amount that feels almost too small to make a difference, which is exactly why most people never start.
The trick is that the money isn't really doing the work. The years are. Every dollar you invest for a newborn has six or more decades to compound, earning returns on its returns on its returns. A dollar invested at birth is simply worth more than the same dollar invested at 30, because it has that much longer to grow.
"But I don't know anything about investing"
Good news: you don't need to.
The strategy that beats the vast majority of professional fund managers over the long run isn't a secret. It's buying one low-cost index fund, on autopilot, every month, and then leaving it alone. The research on this is genuinely humbling: over 15-year periods, more than 90% of actively managed funds fail to beat the plain, boring index they're measured against.
You don't need to watch the market. You don't need to know when to buy or sell. In fact, the data suggests the less you look, the better you tend to do. Investors who check their portfolios daily earn lower returns than those who check once a year, because looking invites tinkering, and tinkering is where returns go to die.
If you want the full roadmap
I've put everything into a guide called Building Generational Wealth; which accounts exist for children and how to choose between them, what the kiddie tax actually means in plain English, exactly which funds to look at, a step-by-step walkthrough of opening and automating an account, what to do when the market drops, and even how to talk to your child about money as they grow. It's written for complete beginners, with every piece of jargon translated into normal human language.
If you're ready for it, the guide is here.
Finn Hollis provides education, not advice. This essay is for general information only and doesn't consider your personal circumstances. The guide is written for a US audience; account types and tax rules differ elsewhere. Projections assume an 8% average annual return, which isn't guaranteed. Please speak with a licensed financial professional before making investment decisions.
